Rosneft 12M 2006 US GAAP Results ENG Final PUBLISHED · presentation is subject to verification, completion and change. The contents of this presentation have not been verified by

ROSNEFTROSNEFT

FY 2006 FY 2006 US GAAP US GAAP ResultsResults

May 15, 2007May 15, 2007

2

Important NoticeImportant Notice

The information contained herein has been prepared by the Company. The opinions presented herein are based on general information gathered at the time of writing and are subject to change without notice. The Company relies on information obtained from sources believed to be reliable but does not guarantee its accuracy or completeness.

These materials contain statements about future events and expectations that are forward-looking statements. Any statement in these materials that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. We assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.

This presentation does not constitute an offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase any securities and nothing contained herein shall form the basis of any contract or commitment whatsoever. No reliance may be placed for any purposes whatsoever on the information contained in this presentation or on its completeness, accuracy or fairness. The information in this presentation is subject to verification, completion and change. The contents of this presentation have not been verified by the Company. Accordingly, no representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its shareholders, directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation. None of the Company nor any of its shareholders, directors, officers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith.

3

2006 Highlights2006 Highlights

§ Rouble appreciation vs USD

§ Increased tax burden

§ Integrating recent acquisitions

§ Optimization of enhanced downstream portfolio to grow netbacks through:

§ Enhanced MIS/technology solutions

§ Increased sales/distribution capabilities

§ Realizing benefits of new flexibility in netback options

§ Industry leading upstream performance:

§ Production growth

§ Reserve replacement

§ Drilling results

§ Unit costs

§ Lifting cost growth < guidance

§ CAPEX of $3.46§ Vs $3.1 bn in ’05 USD guidance

§ Litigation progress

§ Recent M&A successes

PositivesPositives Challenges, PrioritiesChallenges, Priorities

4

12M 2006 Results12M 2006 Results

(144%)956(423)7%2,9413,137Adjusted Operating cash flow2

(11%)6375980%3,6153,625Adjusted Net income1

104%652 1,331 78%1,944 3,462 Capital expenditures

199%956(967)-12%2,9412,593Operating cash flow

7%566 603 -15%4,159 3,533 Net income

-37%1,402 880 4%7,029 7,276 EBITDA

18%6,919 8,21339%23,863 33,099 Revenues

-4%5.99 5.77 7%21.26 22.66 Oil products output, mmt

-5%3.61 3.454%13.03 13.58Gas, bcm

6%142.81 151.47 8%540.39 582.70 Oil, mln bbl

5%164.04 171.70 7%617.05 662.53 Production, mln boe

Chg., % 4Q05 4Q06 Chg., % 12M05 12M06

1. Net income before minority interest and effect of Sevmorneftegaz sale2. Operating cash flow adjusted for net advance tax payment related to Yukos receivables which are expected to be received in 2007

5

ReservesReserves

11,305

10,410

20,089

31,394

41,804

Proved Probable Possible

R/P, yrSource: D&M 2006 reserves report, SPE case

Rosneft’s oil & gas reserves and reserve lifeRosneft’s oil & gas reserves and reserve life

30 47 63

Liquid hydrocarbon reserves rankingLiquid hydrocarbon reserves ranking

15,927

11,618

10,850

9,781

7,806

6,696

6,471

4,197

3,481

11,823

15,961Rosneft (SPE)

Lukoil (SPE)

Rosneft

Petrochina

Exxon

BP

Chevron

ConocoPhilips

Total

Shell

ENI

Source: Company reports and filingsSEC classification unless otherwise indicated

bn boe

mln boe

6

Crude Oil ProductionCrude Oil Production

1,596.4

1,480.5

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

2006 2005

Daily Crude Oil Production, 2006 vs. 2005Daily Crude Oil Production, 2006 vs. 2005

kbpd

Daily Crude Oil Production, 4Q2006 vs. 4Q2005Daily Crude Oil Production, 4Q2006 vs. 4Q2005

1,646.41,552.2

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

4Q06 4Q05

kbpd

7

Crude Oil Production (cont.)Crude Oil Production (cont.)

-1.0%

-3.9%

0.3%

7.8%

2.7%

2.9%

Gazpromneft

TNK-BP Holding

Tatneft

SurgutNG

Lukoil

Rosneft

2006 Crude Oil Production Growth in Russian Federation2006 Crude Oil Production Growth in Russian Federation

Russia ex. Rosneft: 1.2%

Source: Infotek for peers, company data for Rosneft

8

95.9

14.7 5.4

8.5

8.4

12M05 YNG SevernayaNeft

Sakhalin-1 Purneftegaz Other 12M06

1480.5

1596.4

Crude Oil Production (cont.)Crude Oil Production (cont.)

Includes share in production of affiliates

mln bbl

+7.8%

2006 Crude Oil Production Reconciliation2006 Crude Oil Production Reconciliation

kbpd

9

715

481445

356

275

160

Rosneft Gazpneft Slavneft TNK-BP Lukoil Surgut

Average Daily Flow of New Wells 12m 2006Average Daily Flow of New Wells 12m 2006Average Daily Flow of New Wells 12m 2005Average Daily Flow of New Wells 12m 2005

663608 589

544

320

175

Rosneft Slavneft TNK-BP Gazpneft Lukoil Surgut

Source: Infotek

bpd bpd

Extending Drilling Performance GapExtending Drilling Performance Gap

10

Gas SalesGas Sales

9.57 9.30

2.58 2.62

2006 2005 4Q06 4Q05

Gas Sales, 2006 vs 2005Gas Sales, 2006 vs 2005

9.57 9.30

-

1

2

3

4

5

6

7

8

9

10

2006 2005

bcm

2.58 2.62

-

1

2

3

Q4 2006 Q4 2005

Gas Sales, Q4 2006 vs Q4 2005Gas Sales, Q4 2006 vs Q4 2005

11

10.49 10.38

2.57 2.78

12.15 10.88

3.213.20

2006 2005 4Q06 4Q05

Petroleum products output by owned refineries Petroleum products output by third party refineries

22.6621.26

5.77 5.99

Petroleum Products OutputPetroleum Products Output

Petroleum Products OutputPetroleum Products Output

mln tonnes

Decrease due to scheduled

maintenance at Komsomolsky Refinery

12

2.763.17

3.52

4.27

2003 2004 2005 2006

679 670 684 684

28 4871 83

2003 2004 2005 2006Owned and leased Franchised

Retail GrowthRetail Growth

Number of fillings stationsNumber of fillings stations Average daily sales per 1 filling stationAverage daily sales per 1 filling station

tonnes / daystations

13

Economic EnvironmentEconomic Environment

$/tonne

$/tonne

$/bbl

%

%

RUB/USD

516

550

56.31

4.4%

1.8%

26.59

4Q06

28.2927.1928.51Average RUB/USD rate

10.9%9.0%2.3%Inflation rate

6.9%19.1%1.2%Real RUB appreciation vs USD

50.4761.2753.68Urals oil price (av. Med and NWE)

506587537Gasoil, 0.2% (av. Med)

488558533Diesel fuel (av. RF)

12M0512M064Q05

14

23,863

33,099

37

3,042

4,283 4471,427

2006 Revenue Oil Volumes Oil Price ProductsVolumes

Products Price Other Sales 2005 Revenue

Revenue ReconciliationRevenue Reconciliation

Revenue ReconciliationRevenue Reconciliation

+38.7%

USD mln

15

53.7

24.5

9.5

56.3

33.9

9.5

Urals Export Duty MET

4Q05 4Q06

50.5

18.7

8.8

61.3

27.3

11.0

Urals Export Duty MET

2005 2006

Tax EnvironmentTax Environment

Oil Price and Taxes in 4Q 2006Oil Price and Taxes in 4Q 2006

+2.63

USD/bbl

+9.35

+0.01

Oil Price and Taxes in 2006Oil Price and Taxes in 2006

Oil Price Increase – Tax Increase = -6.7 USD/bbl+10.80

USD/bbl

+8.58

+2.23

Oil Price Increase – Tax Increase = -0.1 USD/bbl

16

Netback LadderNetback Ladder

2006 Netbacks and crude allocation ($/bbl)2006 Netbacks and crude allocation ($/bbl)

4Q2006 Netbacks and crude allocation ($/bbl)4Q2006 Netbacks and crude allocation ($/bbl)

Rosneftrefineries

$34.2

Transneft export

$27.9

CIS Transneftexport

$26.8

Third partyrefineries

$27.3

Domesticcrude

13%6%

24%

Total sales:582.7 mm bbl

$32.4

16%

$29.5$26.4

1%1%

Non-Transneft export

CIS Non-Transneft export

38%

Rosneftrefineries

$29.4

Transneft export

$27.6

CIS Transneftexport

$26.0

Third partyrefineries

$18.812%5%

25%

Total sales:158.0 mm bbl

$25.4

16%

$23.7

$16.440%

1%

Non-Transneft export

38%

CIS Non-Transneft export

1%

Domestic crude

Urals average price: $ 61.3/bblCrude Export Duty: $ 27.3/bbl

Urals average price: $ 56.3/bblCrude Export Duty: $ 33.9/bbl

17

SG&A and Transportation ExpensesSG&A and Transportation Expenses

2,820

2,231

589

12M05

778

589

189

4Q05

1,067

867

200

4Q06

28.5%7575.8%General and administrative expenses

44.6%3,22647.2%Pipeline tariffs and transportation costs

41.2%3,98337.1%Total

Chg., %12M06Chg., %USD mln

General and administrative expensesGeneral and administrative expenses

5376

138 118

757 589

19

0

150

300

450

600

750

900

12M05 Inflation Salaries Materials Other expenses Bad debt provision 12M06

USD mln

18

Operating Expenses and PurchasesOperating Expenses and Purchases

111

(11)*

94

194

24

57

449

530

4Q05

311

231

95

637

64

226

1,333

1,623

12M05

24.3%13862.7%506- Processing

-218.2%1358.4%366- Oil products

-517.0%(392)*371.6%448- Crude oil

-224.2%(241)*107.2%1,320Value of purchased goods and services

354.2%109231.3%212- Other

140.4%13756.2%353- Refining and Marketing

4.7%47022.4%1,632- Production

35.1%71635.4%2,197Operating expenses

Chg. yoy, %4Q06Chg.,

yoy, %12M06USD mln

* In Q4 2006 and Q4 2005 certain purchases were netted with revenue

19

2.182.44

0.05

0.0

0.5

1.0

1.5

2.0

2.5

3.0

12M06 12M05

Lifting cost growth vs inflationLifting cost growth vs inflationLifting costs, 2006 vs. 2005Lifting costs, 2006 vs. 2005

USD/boe

Lifting Cost Increase in Line with GuidanceLifting Cost Increase in Line with Guidance

Lifting cost exc.

Sakhalin-1

Lifting cost related to Sakhalin-1 expenses

+11.9%

14.2%11.9%

19.1%

Real Roubleappeciation

Increase in lifting costs Increase in liftingcosts, exc. Sakhalin-1

20

1Q06 2Q06 3Q06 4Q06

Raw materials Maintenance Fuel and energy Salaries Rent Transportation costs Other costs

$2.25

$2.83$2.92 $3.14

Lifting CostLifting Cost

USD/bbl

Liquids Lifting Cost BreakdownLiquids Lifting Cost Breakdown

$3.02Lifting cost

exc. Sakhalin-1

$0.12Lifting cost related to Sakhalin-1 expenses

21

7,276 7,029

168603

995683

6,5409,236

2005 EBITDA Revenues Tax Burden Hydrocarbonspurchases

Transportationcosts

Operating andexplorationexpenses

G&A costs 2006 EBITDA

EBITDAEBITDA

EBITDA ReconciliationEBITDA Reconciliation

+3.5%

USD mln

22

Improved Credit Profile, Reduced Cost of DebtImproved Credit Profile, Reduced Cost of Debt

§ Borrowing margin reduced 5 times in two years

BB+(Developing

outlook)

B+

B

Baa2 (Positive outlook)

Baa2

Ba3

BB+ (Positive outlook)

BB+

as of 31.12.2004 as of 31.12.2005 As of 31.12.2006

S&P Moody's Fitch

Evolution of Rosneft Credit RatingsEvolution of Rosneft Credit Ratings Weighted Average Cost of DebtWeighted Average Cost of Debt

2.40%

3.60%

2.68% 0.74%

4.39%

5.32%

6.00%

7.07%

6.06%

0%

1%

2%

3%

4%

5%

6%

7%

8%

as of 31.12.04 as of 31.12.05 as of 31.12.2006

1m Libor Av.-Weighted Margin Av.-Weighted Rate

23

Net IncomeNet Income

Net income Before Minority Interest Adjusted for Sevrmorneftegaz Sale ReconciliationNet income Before Minority Interest Adjusted for Sevrmorneftegaz Sale Reconciliation

+9.8%

3,615 3,625

218

756105

715165168603

995683

6,5409,236

2005 Net Profit Revenues Tax Burden Hydrocarbonspurchases

Transportationcosts

Operatingand

explorationexpenses

G&A DD&A growth FX Loss Interest Income tax Other Net profit 2006

USD mln

+0.3%

24

Capital ExpendituresCapital Expenditures

916194

3,462184483

2,795

12M06

146366

1,94435

3031,606

12M05

1141Acquisition of licenses23313Acquisition of entities

6521331Total275Other

162335Refining and marketing488921Exploration and production

4Q054Q06USD mln

25

Net DebtNet Debt

Net Debt ReconciliationNet Debt Reconciliation

+9.8%2,593 2,795

483 184916

1,339463

3532,115

499 30

11,030

13,324

Net Debt as ofJan 1st, 2006

OperatingCash Flow

UpstreamCapex

DownstreamCapex

Other Capex LicenseAcquisitions

Repayment ofSakh-1 Carry

Acquisition ofDebt

Receivable

OtherInvestingActivities

Net EquityProceeds

Dividendspaid (inc.Minorities)

FX Effect Net Debt as ofDec 31st,

2006

USD mln

* Operating cash flow includes net advance tax payment related to Yukos receivables

26

YUKOS receivablesYUKOS receivables

Key ConsiderationsKey Considerations 2007 Impact2007 Impact

§ RUB 264 bn in total approved by court

§ RUB 34 bn is recognized under US GAAP

§ RUB 21.3 bn as accounts receivable

§ RUB 12.7 bn as acquired debt receivable

§ RUB 141 bn of claims is subject to income tax

§ RUB 33.8 bn (USD 1,285 mln) has been paid in Q4 ’06

§ Reserve was created for the receivables resulting in RUB 19.5 bn (USD 741 mln) of 2006 income tax payment delayed until 2007

§ Resulting net advance tax payment: RUB 14.3 bn (USD 544 mln)

§ Rosneft expects full settlement of RUB 264 bn in 2007

§ 100% will be recognized in CF statement

§ Up to RUB 230 bn will be recognized in P&L statement

§ Deferred tax of RUB 19.5 bn will be paid

§ No other additional taxes to be paid